UK Markets closed

Half-year report

  • Oops!
    Something went wrong.
    Please try again later.
·26-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Half-yearly Results

21 October 2020

Octopus AIM VCT plc, managed by Octopus Investments Limited, today announces the half-yearly results for the six months ended 31 August 2020.

These results were approved by the Board of Directors on 20 October 2020.

You may shortly view the half-yearly report in full by visiting https://octopusinvestments.com/our-products/venture-capital-trusts/octopus-aim-vcts/. All other statutory information will also be found there.

Financial Summary

Six months to

31 August 2020

Six months to

31 August 2019

Year to

29 February 2020

Net assets (£’000)

135,002

118,961

115,110

Profit after tax (£’000)

15,088

1,043

992

Net asset value (‘NAV’) per share (p)

101.8

98.9

93.3

NAV total return (%)*

12.3

0.9

1.3

Dividends paid in the period (p)

3.0

3.0

9.0

Dividend yield (%)**

3.3

3.1

9.4

Dividend declared (p)***

2.5

2.5

3.0

Special dividend declared (p)***

-

3.5

-

*Total Return is an alternative performance measure calculated as movement in NAV per share in the period plus dividends paid in the period, divided by the NAV per share at the beginning of the period.
**Dividend yield is calculated as dividend paid in the period divided by the opening share price.
***The interim dividend of 2.5p will be paid on 15 January 2021 to those shareholders on the register on 18 December 2020.

Chairman’s Statement

I am pleased to report the half-yearly results for Octopus AIM VCT plc. The six month period to 31 August 2020 has been one of considerable volatility for stock markets as the Coronavirus pandemic unfolded. The lockdown of the UK and most other western economies led to all stockmarket indices suffering severe falls in March before recovering strongly in April and May in response to the unprecedented fiscal measures adopted by our Government and others around the world to offset the damage caused to companies and economies. Against this background the performance of the VCT has been robust, benefitting from its relatively high exposure to the technology and healthcare sectors and the Net Asset Value rose by 12.3% on a total return basis after adding back the dividend paid in August.

The Board has declared an interim dividend of 2.5p a share which will be paid on 15 January 2021 to those shareholders on the register on 18 December 2020.

The Investment Manager has made eleven qualifying investments in the period and these are explained in more detail within the Interim Management Report. The pipeline of potential VCT qualifying investments increased sharply in response to the Coronavirus pandemic as existing AIM companies sought to secure sufficient capital to carry out their business plans. Reassuringly, AIM has fulfilled its function with many placings oversubscribed and more than £3.3 billion raised for companies in this difficult period.

I should like to take the opportunity to welcome Andrew Boteler, who joined the board in March and whose election was ratified by shareholders at the Annual General Meeting in July.

The Board has recently announced the launch of a new public offer of shares. On the basis of current evidence, the Manager believes there will be good investment opportunities for new funds, despite the possibility of further bouts of volatility as a result of the ongoing Coronavirus pandemic.

Roger Smith

Chairman

20 October 2020

Interim Management Report

Overview
The six months to 31 August 2020 have seen financial markets endure periods of heightened volatility as a result of the spread of the Coronavirus pandemic and the subsequent lockdown. Most companies in the portfolio have responded well to a very challenging situation, publishing detailed trading statements including banking relationships and balance sheet headroom, and in many cases concluding successful fundraisings.

New issues continued to be impacted by market conditions as all eyes were on the Coronavirus pandemic and the longer-term impact of global lockdowns on companies as we emerge from the crisis. However, this presented us with demand for additional capital from existing AIM companies and has already created opportunities to invest into some exciting businesses we had already been tracking. AIM raised £3.3 billion for companies in the period.

Performance
Adding back the 3.0p dividend paid in the period, the Net Asset Value increased by 12.3% in the six months to 31 August 2020. This compares with a 12.9% rise in the AIM Index, an 11.7% fall in the Smaller Companies Index (ex Investment Trusts) and a 7.6% fall in the FTSE All Share Index, all on a total return basis. Performance was, as ever, most influenced by stock specific news, but the portfolio as a whole benefitted from its relatively high exposure to the technology and healthcare sectors and correspondingly smaller exposure to the high street and energy companies which have been adversely affected by recent events.

Although all companies have found the past six months challenging, some in the healthcare sector have benefitted from a renewed interest from investors into the research and development of drugs, vaccines and testing, particularly in relation to Coronavirus. This has allowed many to raise money in oversubscribed placings putting them on a much sounder financial footing and increasing their chances of future success. Similarly, the importance of innovative software and IT capability has been highlighted by the lockdown with many companies in this sector still expected to be able to demonstrate growth. However, most companies exposed to the high street or leisure activities have had to furlough a high proportion of their staff and their path to recovery is still uncertain.

The majority of the smaller healthcare holdings performed well in the period. Omega Diagnostics (now sold), EKF Diagnostics, Intelligent Ultrasound, Diaceutics, Synairgen and Genedrive all made positive contributions to performance, helped in the short term by their various involvements in the development of treatments or tests for Coronavirus. EKF Diagnostics is already profitable and cash generative and each of the others has taken the opportunity to raise new funds to advance the development of existing programmes. Ergomed and Ixico continued to benefit from upgrades to forecasts and their shares performed very well in the period.

Maxcyte’s growth rate is now accelerating with new partners adopting its cell engineering enabling technology for cell and gene editing and it has also announced an intention to obtain a Nasdaq float in the next twelve months. RenalytixAI has issued a series of positive announcements about reimbursement for its KidneyInteIX test which is designed to predict declines in kidney function. It is on a pathway to full US regulatory approval and has recently made a successful Nasdaq debut raising further funds for the commercialisation of its test.

Elsewhere, PCI Pal has performed well as companies have sought to secure call centres working remotely and VR Education has developed virtual reality conferencing software to add to its Engage educational platform. Learning Technologies has reported robust trading helped by acquisitions that have added significant amounts of recurring software revenues, insulating it from the crisis. It successfully raised funds to finance further acquisitions as opportunities arise. Loop-up also saw a strong demand for its conference calling software and reported a significant reduction in its debt position from increased profits. Gear4 Music also traded very well in lockdown as high street competitors were forced to close their doors. It had already reduced its distribution costs and increased its margins and profitability.

The two largest detractors from performance in the period were Mattioli Woods and Brooks Macdonald, both of which have a significant proportion of revenues dependent on assets under management and therefore exposed to stockmarket movements. Both remain in strong financial health. Breedon was another underperformer although the shares have recovered well from their lows in March when the whole company had to cease trading in lockdown. We expect it to emerge strongly from the crisis because of all the capital building projects in the pipeline. Quixant shares continued to suffer as its major customers suffered a total shutdown of their operations. Its balance sheet remains strong. Craneware saw its shares fall from a high after reporting a slower than hoped for uptake for its new Trisus platform resulting in flat overall sales. The company retains its strong positioning as a supplier to the US hospital market and stands out as a cash generative software company with growing annual recurring revenues although a slowdown in planned operations in US hospitals has impacted sales growth this year. There have been other examples of slow sales cycles due to uncertainty with Osirium and Velocity both affected.

Portfolio Activity
In the period under review, the Company made eleven qualifying investments at a total cost of £5.8 million. This was well ahead the £3.9 million invested in the corresponding period last year and even further ahead of the second half when the supply of fundraisings had been held back by renewed Brexit fears. This recovery in supply reflects the part that AIM has played in providing finance to its constituents through the Coronavirus pandemic. Six of these were follow-on investments into existing holdings in Sosandar, Trackwise, PCI-Pal, Fusion Antibodies, Genedrive and Intelligent Ultrasound totalling £3.4 million. The first three raised money to develop their existing businesses and to progress towards being self-supporting and the latter three all had new opportunities in either diagnostics or treatment arising from the Coronavirus pandemic as well as their existing original programmes.

Only one of these investments, The British Honey Company, was into a new float on the AQSE Growth Market (formerly known as NEX Exchange). It is developing branded honey products including a range of flavoured spirits from its distillery. At £0.6 million it is a small initial holding and we expect to be able to support the company as it grows. The four new investments totalling £1.8 million into existing AIM companies were into Rosslyn Data Technologies, a software company providing procurement and master data management solutions to large companies, Synairgen which is currently testing its inhaled compound on Coronavirus, Ilika, a pioneer in solid state battery technology and Feedback plc, a specialist medical imaging company providing software and messaging systems to NHS hospitals.

We also invested a further £0.36 million into the FP Octopus UK Multi-Cap Income Fund and
£0.18 million into the FP Octopus UK Micro Cap Growth Fund, with the objective of obtaining a better return on our cash awaiting investment.

A number of disposals were made in the period resulting in cash proceeds of £4.8 million and a net gain of £1.5 million since acquisition. These were a mixture of profits being taken on existing holdings such as Loop-Up, Gamma Communications, GB Group, VR Education; a partial disposal of the holding in Maestrano and the disposal of the entire holding in Cello Health as a result of a takeover. We also sold the whole holding in Omega Diagnostics at a profit after a strong run in the share price. Nektan unfortunately called in the administrators after a failed fundraising attempt and we have written down the holding to £nil, realising a total loss of £1.3 million, which is included in the net profit figure of £1.5 million above.

Unquoted Investments
The Company is able to make investments in unquoted companies intending to float. On 31 August 2020 2.5% (29 February 2020: 2.8% and 31 August 2019: 2.5%) was invested in unquoted companies.

Transactions with Manager
Details of amounts paid to the Manager are disclosed in Note 8 to the Financial Statements

Share Buybacks
In the six months to 31 August 2020, the Company bought back 1,299,878 Ordinary shares for total consideration of £1,117,000. The Company remains committed to maintaining a discount of approximately 4.5% to NAV (equating to a 5.0% discount to the selling shareholder after costs)

Share Issues and Fundraising
In this period 9,686,020 shares were issued in connection with the 2019/20 prospectus offer which closed fully subscribed in February 2020.

On 20 August 2020 the Company launched a new combined offer for subscription alongside Octopus AIM VCT 2 to raise up to £20 million with an over allotment of up to a further £10 million.

In addition 743,051 new ordinary shares were issued in August 2020 to shareholders who participated in the dividend reinvestment scheme (DRIS), and 37,873 new ordinary shares were issued in June 2020 as a result of reduced adviser charges, and reduced annual management fee for Octopus employees. Further details can be seen in Note 6 to the Financial Statements.

Dividend
On 7 August 2020, the Company paid a dividend of 3p per share, being the final dividend for the year ended 29 February 2020.

For the period to 31 August 2020, the Board has declared an interim dividend of 2.5p. This will be paid on 15 January 2021 to shareholders on the register on 18 December 2020.

It is the Company’s objective to continue to pay a minimum of 2.5p each half year and to adjust the final dividend annually, based on the year-end share price, so that the shareholders receive either 5p per annum or a 5% yield, whichever is the greater at the time.

Risks and Uncertainties
The Company’s principal risks and uncertainties are set out in Note 7 to the unaudited financial statements.

Outlook
Although the UK Government had begun to ease the lockdown, at the time of writing, new Coronavirus cases have been rising again bringing an escalation in government intervention and with it increased uncertainty. There are a number of newer holdings that we were expecting to demonstrate progress over the coming twelve months and this could now prove more challenging for some of them although there are others that have demonstrated good progress in the current reporting season. Companies have put out detailed statements revealing their financial positions and stress testing for different scenarios and stock markets have seen a period of almost unprecedented information. Encouragingly, fiscal measures that have been put in place by governments around the globe have enabled capital markets to fulfil their function and raise much needed capital for companies to enable them to survive and grow in the future.

The flow of VCT qualifying issues has been strong since March. The current escalation in Coronavirus cases and government interventions may impact upon the flow of new opportunities in the short term, but on the assumption that the effects of the pandemic will eventually diminish, longer term prospects continue to look favourable. The portfolio now contains 78 holdings across a range of sectors with the balance still weighted towards profitable companies that are pursuing growth strategies. The VCT currently has funds available for new investments which should allow us to take advantage of any dip in valuations should sentiment weaken again and to support existing portfolio companies where we can. The investment rate has accelerated in the past six months and as a result the VCT is 93.3% invested in qualifying companies allowing us to be selective when viewing new investment opportunities.

The AIM Team

Octopus Investments

20 October 2020

Director’s Responsibilities Statement

We confirm that to the best of our knowledge:

• the half-yearly financial statements have been prepared in accordance with Financial Reporting Standard 104 “Interim Financial Reporting” issued by the Financial Reporting Council;

• the half-yearly financial statements give a true and fair view of the assets, liabilities, financial position, and profit or loss of the Company;

• the half-yearly report includes a fair review of the information required by the Financial Conduct Authority’s Disclosure and Transparency Rules, being:

• an indication of the important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements.

• a description of the principal risks and uncertainties for the remaining six months of the year; and

• a description of related party transactions that have taken place in the first six months of the current financial year, that may have materially affected the financial position or performance of the Company during that period and any changes in the related party transactions described in the last annual report that could do so.

• the half-yearly financial statements have not been audited or reviewed by the auditors. On behalf of the Board

Roger Smith

Chairman

20 October 2020

Income Statement

Unaudited
Six months to 31 August 2020

Unaudited
Six months to 31 August 2019

Audited
Year to 29 February 2020

Revenue
£’000

Capital
£’000

Total
£’000

Revenue
£’000

Capital
£’000

Total
£’000

Revenue
£’000

Capital
£’000

Total
£’000

Gain on disposal of fixed asset investments

-

1,118

1,118

-

490

490

-

349

349

(Loss)/gain on disposal of current asset investments

-

(116)

(116)

-

-

-

-

382

382

Gain/(loss) on valuation of fixed asset investments

-

14,585

14,585

-

(90)

(90)

-

505

505

Gain on valuation of current asset investments

-

543

543

-

1,563

1,563

-

1,507

1,507

Investment income

123

-

123

350

-

350

776

36

812

Investment management fees

(224)

(672)

(896)

(246)

(739)

(985)

(482)

(1,445)

(1,927)

Other expenses

(269)

-

(269)

(285)

-

(285)

(636)

-

(636)

Profit before tax

(370)

15,458

15,088

(181)

1,224

1,043

(342)

1,334

992

Tax

-

-

-

-

-

-

-

-

-

Profit after tax

(370)

15,458

15,088

(181)

1,224

1,043

(342)

1,334

992

Earnings per share – basic and diluted

(0.3p)

11.7p

11.4p

(0.1p)

1.0p

0.9p

(0.3p)

1.1p

0.8p

• the ‘Total’ column of this statement represents the statutory Income Statement of the Company; the supplementary revenue return and capital return columns have been prepared in accordance with the AIC Statement of Recommended Practice.

• all revenue and capital items in the above statement derive from continuing operations.

• the Company has no recognised gains or losses other than those disclosed in the income statement.

• the Company has only one class of business and derives its income from investments made in shares and securities and from bank and money market funds, as well as OEIC funds.

Balance Sheet

Unaudited
As at 31 August 2020

Unaudited
As at 31 August 2019

Audited
As at 29 February 2020

£’000

£’000

£’000

£’000

£’000

£’000

Fixed asset investments

98,498

81,418

81,699

Current assets:

Investments

12,327

30,853

24,859

Money market funds

1,326

1,319

1,324

Debtors

215

57

78

Cash at bank

23,959

5,971

24,367

37,827

38,200

50,628

Creditors: amounts falling due within one year

(1,323)

(657)

(17,217)

Net current assets

36,504

37,543

33,411

Total assets less current liabilities

135,002

118,961

115,110

Called up equity share capital



1,326



1,202



1,234

Share premium

75,666

82,098

65,883

Capital redemption reserve

147

112

134

Special distributable reserve

38,546

31,269

43,630

Capital reserve realised

(24,985)

(27,175)

(26,719)

Capital reserve unrealised

45,095

31,717

31,371

Revenue reserve

(793)

(262)

(423)

Total equity shareholders’ funds

135,002

118,961

115,110

NAV per share – basic and diluted

101.8p

98.9p

93.3p

The statements were approved by the Directors and authorised for issue on 20 October 2020 and are signed on their behalf by:

Roger Smith

Chairman

Company No: 03477519

Statement of Changes in Equity

Share Capital
£’000

Share Premium
£’000

Capital
redemption
reserve
£’000

Special distributable reserves*
£’000

Capital reserve realised*
£’000

Capital reserve unrealised
£’000

Revenue reserve*
£’000

Total
£’000

As at 1 March 2020

1,234

65,883

134

43,630

(26,719)

31,371

(423)

115,110

Total comprehensive income for the period

-

-

-

-

330

15,128

(370)

15,088

Contributions by and distributions to owners:

Repurchase and cancellation of own shares

(13)

-

13

(1,117)

-

-

-

(1,117)

Issue of shares

105

10,438

-

-

-

-

-

10,543

Share issue costs

-

(655)

-

-

-

-

-

(655)

Dividends paid

-

-

-

(3,967)

-

-

(3,967)

Total contributions by and distributions to owners

92

9,783

13

(5,084)

-

-

-

4,804

Other movements:

Prior years’ holding gains now realised

-

-

-

-

1,404

(1,404)

-

-

Total other movements

-

-

-

-

1,404

(1,404)

-

-

Balance as at 31 August 2020

1,326

75,666

147

38,546

(24,985)

45,095

(793)

135,002

*The sum of these reserves is an amount of £12,769,000 (31 August 2019: £3,832,000 and 29 February 2020: £16,488,000) which is considered distributable to shareholders.

Share Capital
£’000

Share Premium
£’000

Capital
redemption
reserve
£’000

Special distributable reserves*
£’000

Capital reserve realised*
£’000

Capital reserve unrealised
£’000

Revenue reserve*
£’000

Total
£’000

As at 1 March 2019

1,213

81,368

94

36,592

(28,999)

32,317

(81)

122,504

Total comprehensive income for the period

-

-

-

-

(249)

1,473

(181)

1,043

Contributions by and distributions owners:

Repurchase and cancellation of own shares

(18)

-

18

(1,717)

-

-

-

(1,717)

Issue of shares

7

736

-

-

-

-

-

743

Share issue costs

-

(6)

-

-

-

-

-

(6)

Dividends paid

-

-

-

(3,606)

-

-

-

(3,606)

Total contributions by and distributions to owners

(11)

730

18

(5,323)

-

-

-

(4,586)

Other movements:

Prior years’ holding gains now realised

-

-

-

-

2,073

(2,073)

-

-

Total other movements

-

-

-

-

2,073

(2,073)

-

-

Balance as at 31 August 2019

1,202

82,098

112

31,269

(27,175)

31,717

(262)

118,961


Share Capital
£’000

Share Premium£’000

Capital
redemption
reserve
£’000

Special distributable reserves*
£’000

Capital reserve realised*£’000

Capital reserve unrealised£’000

Revenue reserve*
£’000

Total
£’000

As at 1 March 2019

1,213

81,368

94

36,592

(28,999)

32,317

(81)

122,504

Total comprehensive income for the period

-

-

-

-

(678)

2,012

(342)

992

Contributions by and distributions to owners:

Repurchase and cancellation of own shares

(40)

-

40

(3,829)

-

-

-

(3,829)

Issue of shares

61

6,454

-

-

-

-

-

6,515

Share issue costs

-

(295)

-

-

-

-

-

(295)

Dividends paid

-

-

-

(10,777)

-

-

-

(10,777)

Total contributions by and distributions to owners

21

6,159

40

(14,606)

(8,386)

Other movements:

Cancellation of share premium

-

-

-

-

2,958

(2,958)

-

-

Prior years’ holding gains now realised

-

(21,644)

-

21,644

-

-

-

-

Total other movements

-

(21,644)

-

21,644

2,958

(2,958)

-

-

Balance as at 29 February 2020

1,234

65,883

134

43,630

(26,719)

31,371

(423)

115,110

Cash Flow Statement

Unaudited
Six months to
31 August 2020

£’000

Unaudited
Six months to
31 August 2019
£’000

Audited
Year to
29 February 2020
£’000

Cash flows from operating activities

Profit before tax

15,088

1,043

992

Adjustments for:

(Increase)/decrease in debtors

(137)

14

(7)

Decrease in creditors

(157)

(358)

(84)

Gain on disposal of fixed assets

(1,118)

(490)

(349)

Loss/(gain) on disposal of current assets

116

-

(382)

Gain/(loss) on valuation of fixed asset investments

(14,585)

90

(505)

Gain on valuation of current asset investments

(543)

(1,563)

(1,507)

Net cash generated from operating activities

(1,336)

(1,264)

(1,842)

Cash flows from investing activities

Purchase of fixed asset investments

(5,847)

(3,866)

(6,236)

Purchase of current asset investments

(541)

(438)

(1,118)

Sale of fixed asset investments

4,751

4,519

7,062

Sale of current asset investments

13,500

-

7,000

Net cash flows from investing activities

11,863

215

6,708

Cash flows from financing activities

Movement in applications account

(15,737)

-

16,286

Purchase of own shares

(1,117)

(1,717)

(3,829)

Share issues (net of costs)

9,178

148

4,460

Dividends paid

(3,257)

(3,017)

(9,017)

Net cash flows from financing activities

(10,933)

(4,586)

7,900

Decrease/(increase) in cash and cash equivalents

(406)

(5,635)

12,766

Opening cash and cash equivalents

25,691

12,925

12,925

Closing cash and cash equivalents

25,285

7,290

25,691

Cash and cash equivalents comprise

Cash at bank

23,241

5,970

24,367

Applications cash

718

1

-

Money market funds

1,326

1,319

1,324

25,285

7,290

25,691

Notes to the Half-Yearly Report

1. Basis of preparation

The unaudited half-yearly report which covers the six months to 31 August 2020 has been prepared in accordance with the Financial Reporting Council’s (FRC) Financial Reporting Standard 104 “Interim Financial Reporting” (March 2018) and the Statement of Recommended Practice (SORP) for Investment Companies re-issued by the Association of Investment Companies in February 2018.

The Directors consider it appropriate to adopt the going concern basis of accounting. The Directors have not identified any material uncertainties to the Company’s ability to continue to adopt the going concern basis over a period of at least twelve months from the date of approval of the financial statements. In reaching this conclusion the Directors have had regard to the potential impact on the economy and the Company of the current Coronavirus pandemic.

The principal accounting policies have remained unchanged from those set out in the Company’s 2020 Annual Report and Accounts.

2. Publication of non-statutory accounts

The unaudited half-yearly report for the six months ended 31 August 2020 does not constitute statutory accounts within the meaning of s.415 of the Companies Act 2006 and has not been delivered to the Registrar of Companies. The comparative figures for the year ended 29 February 2020 have been extracted from the audited financial statements for that year, which have been delivered to the Registrar of Companies. The independent auditor’s report on those financial statements, in accordance with chapter 3 of part 16 of the Companies Act 2006, was unqualified. This half-yearly report has not been reviewed by the Company’s auditor.

3. Earnings per share

The earnings per share at 31 August 2020 is calculated on the basis of 132,109,244 (31 August 2019: 120,542,288 and 29 February 2020: 120,698,159) shares, being the weighted average number of shares in issue during the period.

There are no potentially dilutive capital instruments in issue and, therefore, no diluted return per share figures are relevant. The basic and diluted earnings per share are therefore identical.

4. Net asset value per share

31 August 2020

31 August 2019

29 February 2020

Net assets (£’000)

135,002

118,961

115,110

Shares in Issue

132,592,788

120,244,697

123,425,722

Net Asset Value per share

101.8p

98.9p

93.3p

5. Dividends

The interim dividend declared of 2.5 pence per Ordinary share will be paid on 15 January 2021 to those shareholders on the register on 18 December 2020.

6. Buybacks and share issues

During the six months ended 31 August 2020 the Company repurchased the following shares.

Date

No. of shares

Price (p)

Cost (£)

19 March 2020

437,120

77.0

337,000

23 April 2020

235,405

84.4

198,000

28 May 2020

141,379

87.8

124,000

25 June 2020

89,859

91.3

82,000

23 July 2020

129,255

89.6

116,000

27 August 2020

266,860

97.3

260,000

Total

1,299,878

1,117,000

The weighted average price of all buybacks during the period was 85.9 pence per share.

During the six months ended 31 August 2020 the Company issued the following shares.

Date

No. of shares

Price (p)

Gross proceeds (£)

6 March 2020

9,290,032

101.5

9,429,000

16 April 2020

395,988

92.8

368,000

24 June 2020*

37,873

95.5

36,000

10 August 2020 (DRIS)

743,051

95.6

710,000

Total

10,466,944

10,543,000

*Shares issued as a result of reduced adviser charges, and reduced annual management fee for Octopus Employees.

The weighted average allotment price of all shares issued during the period was 100.7 pence per share.

7. Principal risks and uncertainties

The Company’s principal risks are VCT qualifying status risk, valuation risk, investment risk, financial risk, regulatory and reputational risk, operational risk and economic and price risk. These risks, and the way in which they are managed, are described in more detail in the Company’s Annual Report and Accounts for the year ended 29 February 2020. The Board has also considered emerging risks, including the Coronavirus pandemic, which the Board seeks to mitigate by setting policy and reviewing performance. Otherwise, the Company’s principal risks and uncertainties have not changed materially since the date of that report.

8. Related party transactions

The Company has employed Octopus Investments Limited (“Octopus” or “the Manager”) throughout the period as Investment Manager. Octopus has also been appointed as Custodian of the Company’s investments under a Custodian Agreement. The Company has been charged £896,000 by Octopus as a management fee in the period to 31 August 2020 (31 August 2019: £985,000 and 29 February 2020 £1,927,000). The management fee is payable quarterly and is based on 2% of net assets at quarterly intervals.

The Company has invested £0.54 million into Octopus managed funds (31 August 2019: £0.44 million and 29 February 2020 £1.1 million), being the Octopus Portfolio Manager and Micro Cap funds. To ensure the Company is not double charged management fees on these products, the Company receives a reduction in the management fee as a percentage of the value of these investments. This amounted to £48,000 in the period to 31 August 2020 (31 August 2019: £53,000 and 29 February 2020 £107,000). For further details please refer to the Company’s Annual Report and Accounts for the year ended 29 February 2020.

9. Post balance sheet events

The following events occurred between the Balance sheet date and the signing of these financial statements.

• An investment of £1,050,000 into the FP Octopus UK Multi Cap Income Fund;

• An investment of £450,000 into the FP Octopus UK Micro Cap Growth Fund;

• An investment of £209,964 into Popsa Holdings Ltd;

• Partial disposal of Gamma Communications plc for a consideration of £383,388;

• Partial disposal of GB Group Plc for a consideration of £530,271

• Partial disposal of Trackwise Designs Ltd for a consideration of £500,688; and

• Full disposal of Equals Group Plc for a consideration of £359,763.

• On 24 September 2020, the Company purchased for cancellation 241,130 Ordinary Shares at a price of 96.6p.

• A cancellation of Share Premium amounting to £35.4 million was granted on 18 September 2020.

10. Additional information

This report will be made available to all shareholders. Copies are also available from the registered office of the Company at 33 Holborn, London, EC1N 2HT, and will also be available to view on the Octopus website at www.octopusinvestments.com.


Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting